Sociological Theory: Rational Choice Theory

Rational choice theory tries to explain why people make decisions or take actions that have particular outcomes, how they do so and to predict the decisions they will make given certain circumstances. Rational choice theory is not unique to sociology; in fact it has its intellectual roots in classical economics and political theory. But its application by sociologists is unique, because of the way sociologists use rational choice theory to not only explain the calculations of costs and benefits people make before they act, but also how these calculations are made in the context of social interactions and how they contribute to a stable social order. The concepts and terms of rational choice theory have developed into what is known as exchange theory. Rational choice theory is used by criminologists to explain why would-be offenders make decisions to engage in activities that have potentially criminal outcomes and by medical sociologists to explain why people make certain health related choices and not others. However, rational choice theory has been criticized because first, it generally ignores the social determinants of decisions, choices and actions; second, it over-rationalizes human thought and action; and third, rational choice theory may be a product of modernity insofar as it privileges an individualized approach to explaining decision-making and action.

Keywords Cost-benefit; Individualism; Rational Action; Rationality; Rationalization; Social Exchange Theory; Social Interaction; Social Order

Rational Choice Theory

Overview

Rational choice theory tries to explain why people make decisions with particular outcomes (or take actions); how they do so; and to predict the decisions they will make given certain circumstances. Rational choice theory is not unique to sociology and in fact has its intellectual roots in classical economics and political theory. But its application by sociologists is unique, because of the way the sociologists use rational choice theory to not only explain the calculations of costs and benefits people make before they act, but also how these calculations are made in the context of social interactions and how they contribute to a stable social order. The concepts and terms of rational choice theory have developed into what is known as exchange theory. Rational choice theory is used by criminologists to explain why would-be offenders make decisions to engage in activities that have potentially criminal outcomes; and by medical sociologists to explain why people make certain health related choices and not others. However, rational choice theory has been criticized because,

• It generally ignores the social determinants of decisions, choices and actions;

• It over-rationalizes human thought and action; and

• Rational choice theory may be a product of modernity insofar as it privileges an individualized approach to explaining decision-making and action.

Rational choice theory seeks to explain human behavior in terms of the decisions that people make in order to maximize their aims, on the assumption that people make calculated decisions about their lives (about money, relationships or actions) based on a given set of constraints or feasible options.

Basis in Economics

The Rational Choice model developed from economic understandings of how prices and the allocation of scarce resources can be explained by the way people rationally maximize utility in relation to cost. Akers (2000) notes that rational choice theory borrows the "expected utility principle" from economics, which states that people will order their behavior according to rational decisions based on straightforward cost-benefit analyses. In sociology, rational choice theory tends to be referred to as exchange theory and refers to a body of theory that attempts to explain aspects of social life by the calculated actions of individuals, even those most unlikely to be responsive to calculative action, such as intimate relationships. Over time, rational choice theory has been linked to or integrated with other sociological traditions, notably within the action frame of reference, network theory, and organization theory (Levi, Cook, O'Brien & Faye, 1990).

The best known example of rational choice theory is Adam Smith's theory of the division of labor from the introduction to the Wealth of Nations (1776), in which the outcome of a free market is that self-interested individuals are wise enough to promote the public good. That is, people make choices in their (economic) self-interest that will have the effect of promoting the public good. The key to understanding rational choice theory then, is the assumption that when people make decisions, and act on those decisions, they do so in their own self-interest. That does not necessarily mean that people are selfish, but they that they rationally calculate the best possible course of action in terms of what it will cost them and the rewards they will reap. In political sociology, rational choice theory tends to be applied to voting behavior, political commitment, and collective organization (voluntary and coerced). Similarly in criminology, rational choice theory is typically applied to cost-benefit calculations that would-be offenders make; in medical sociology, rational choice theory has been used to explain why people make certain health choices.

Weber & Rationality

Also key to understanding rational choice theory is the emphasis on rational action and rationality, characteristics of modernity. For Max Weber, for example, modern Western capitalism is rational. Moreover, rationality is the key characteristic of the age and pervades all aspects of social life. Rationality is most apparent in bureaucratic forms of organization, in which "rules, means, ends, and matter-of-factness dominate its bearing" (Gerth & Mills, 1991, p. 235).

Yet, rationality for Weber is not just about economic market conditions but also is an attitude or sensibility associated with a particular kind of decision-making. Indeed, rationality so pervades social and economic life in ways that are difficult to avoid or challenge: it becomes an "iron cage." Moreover, rationalization marks the progression of modern industrial societies for Weber, as does rational goal-oriented action. Thus, for Weber, it isn't only the behavior of individuals that can be explained by rational choice theory but also the development and characteristics of modern capitalist society.

As such, rational choice theory has developed as a model of human behavior that assumes people are motivated by money and the possibility of making a profit (Scott, 2000). However, although Weber and other theorists acknowledge that many forms of human action and behavior are possible such as value-oriented action (Max Weber), habitual action (such as in the work of Pierre Bourdieu), and emotional action (as in the work of Arlie Hochschild), rational choice theory is unique in that it privileges calculation, rationality, and instrumentalism, even when action may seem irrational (Scott, 2000).

Further Insights

Rational Choice & Social Interaction

While political economy assumes that money is the primary motivator for most people and that the choices they make are motivated by maximizing the potential for accruing money, sociology recognizes, first, that other kinds of rewards may motivate people and second, that rational calculations are made through social interaction. Thus, though decisions and actions may be rationally calculated to maximize benefits, such decisions and actions require a degree of reciprocity, or social exchange.

Moreover, though the rewards that people seek may be material, they are as or more likely to be social. Sociologists have found that resources such as time, prestige, and approval are social rewards that motivate people to act in particular ways. In particular, through social interaction, people reinforce or undermine certain behaviors through an exchange of rewards and sanctions and in this way, sustain social order.

George Homans, a contemporary of Talcott Parsons at Harvard University, developed a sociological model of rational choice theory based on a fusion of B. F. Skinner's behavioral psychology with Homans's own adaptation of economics (see Waters, 1994 for an extended discussion of Homans). Homans's framework privileged social interaction as the framework through which choices are made and emphasized the importance of the mutually interactive performances of individuals (when I act, my performance will be directly rewarded or punished by another). Thus, for Homans, winning social approval was critical to understanding why people made certain decisions.

He argued that social interaction produces benefits and costs (e.g. goods, money, praise, approval, esteem) and people will act rationally to obtain them. When individuals act (make choices), they calculate the cost to them in material and emotional terms of providing benefits for others. They also calculate the profits from the benefits they receive. In making so-called rational choices, people don't want to feel they are disadvantaged or that their actions will incur disapproval. In other words, they look for an element of distributive justice as an outcome of their rational choice (Waters, 1994).

In sum, the benefits received by an individual depend on the benefits the individual provides to others. There is a process of exchange between individuals in which benefits are traded on the basis of the information that people have about the conditions under which they are acting (Scott, 2000). In this way, rational choice theory is used to explain complex social phenomena on the basis of individual actions (Elster, 1990) that express personal preferences, anticipate certain outcomes and are a calculated means to an end.

Social Exchange & Power

Because rational choice occurs in the context of the give and take of social interaction, rational choice theories have developed in sociology as theories of social exchange. Social exchange theory is based the main premise that the exchange of social and material resources is a primary form of human interaction. For instance, in the 1960s Peter Blau argued that all human association entails exchange, because people do things for others on the assumption that they will at least receive approval, if not tangible rewards, and that in doing so, they anticipate their actions will be reciprocated in the future. Moreover, in order for exchange to occur, people have to be attractive to each other (either intrinsically through personal qualities or through the extrinsic advantages they provide). However, not everyone has qualities or advantages that hold equal value and in some exchanges, some people will have more or less resources. This means that people may make calculations about their best interests that involve trade-offs and acknowledge differences in power (Blau, 1964).

In Exchange and Power in Social Life, (1964) Blau argued that while much of social behavior is governed by exchange (of resources, information), power relations affect exchange in ways that may undermine the extent to which exchange fully occurs. That is, while individuals make rational choices, the extent to which those choices result in equal, reciprocal benefits is limited by power.

Blau (1964) deals with the potential for power differentials in exchange relationships by arguing that people may choose to subordinate themselves in a relationship because of the rewards they may ultimately accrue. Equally, where people perceive that the power being exercised over them exceeds the benefit they receive, they will communicate disapproval to each other, sometimes in ways that shape collective organization.

While individual action was the analytical unit for early rational choice theories, collection action has been more recently the focus of analysis. For instance, during the 1970s and 1980s Richard Emerson and Karen Cook developed laboratory experiments dealing with social power and equity in exchange networks and examined

Applications

Criminology

Despite some criticisms about the limits of rational choice theory it has, nonetheless, been developed in substantive fields such as criminology and health. According to Akers (2000), rational choice theory in criminology "is proposed as a grand, all-inclusive explanation of both the decision to commit a specific crime and the development of, or desistance from, a criminal career" (p. 24).

For instance, in criminology, public policy makers, the law and police may argue that crimes are committed through decisions taken to act in a certain ways and that crime prevention strategies will be effective because they cause would-be offenders to think twice before acting in certain ways (i.e. cost-benefit analysis). Typically crimes that lead to some material gain are viewed as rational actions, whereas crimes that are an end in themselves are viewed as expressive (Pratt, 2008).

Tobacco Sales

Consequently, many studies of rational choice theory in criminology try to understand why people make choices to break social and legal rules. An underlying assumption of such studies is that crime is deliberate and calculated and that would-be offenders expect that the choice they make will maximize and indeed outweigh their benefits. For instance, a study in Canada (O'Grady, Asbridge & Abernathy, 2000) examined why tobacco merchants in Ontario break the law, despite severe penalties, in order to sell tobacco to young people. The research found that tobacco merchants did indeed make calculated decisions about whether to make tobacco sales, but that situational elements were important in the choices they made (such as whether young people looked as though they might be older than they turned out to be).

Addiction

Context and situational elements are also important in looking at people's choices in relation to health. For instance, addiction to drugs has been explained in terms of rational self-medication (Becker & Murphy, 1988); or as conscious choice to capitulate to visceral cravings induced by the lack of a specific psychoactive substance in the body (Loewenstein, 1996). Nonetheless, rationality is central, in that the consumption of substances is perceived by the consumer as an act of self-interest (Cohen & Rabinovitch, 2005).

Similarly, medical sociologists have developed explanations for health behaviors based on rational choice theory. For instance, the health behavior model (Becker, 1974) assumes that people make choices about health based on rational calculations about risk avoidance, for instance in relation to behaviors identified and defined by experts as unhealthy such as smoking, eating a high fat diet, getting inadequate physical activity, abusing drugs and alcohol, and practicing unsafe sexual behavior.

However, some people may choose to engage in behaviors deemed unhealthy by experts, or even to avoid behaviors that present opportunities for improved health (Buetow, 2007). Social norms that privilege professional expertise, and good health, deem such choices irrational. However, from the perspective of those choosing to avoid health-promoting behaviors or to engage in unhealthy behaviors, their choices may be rational. Moreover, not all health behaviors can be understood in terms of rational decision-making. For instance, a recent study of parental decision-making in relation to mumps, measles, and rubella (MMR) immunization found that parents, especially mothers, decided to have their child immunized following a media scare about a putative link between MMR immunization and autism, not necessarily through rational calculation in the best interests of their child, but because they took a "leap of faith" in conditions of uncertainty (Brownlie & Howson, 2005).

Viewpoints

Can Rational Choice Theory Explain All Decision-Making Behavior?

Sometimes the costs of a decision or action outweigh the benefits. It becomes difficult to see what is motivating a person to make decisions that are costly, and what is rational about costly decisions. For instance, some relationships are considered special, such as a mother-child relationship, in which it is hard to see net-benefit as the guiding principle of the relationship. Social or non-contractual values, such as duty and love, may determine the nature of the relationship. However, in such a relationship, there are situations in which mothers make rational decisions that are costly because not only will their child benefit, but also mothers benefit from the social approval associated with being a "good mother" (Melberg, 1993).

Similarly, it is difficult to see how rational choice theory can explain altruistic behavior, since altruism is by definition noncalculative. However, a person might make decisions to be helpful or truthful because to do so creates an internal feeling of pleasure, and supports rather than breaks internalized social norms (such as "telling the truth" or "being helpful"). Thus, according to Melberg (1993) in the rational choice model people optimize behavior that not only brings social benefits, but also sustains social norms.

However, there is a question of whether following social norms can be explained by rational choice, since some norms seem more deeply ingrained than others, or why some groups of people are more likely to follow social norms than others (i.e., what explains why some people and not others choose to break rules?). Indeed, in The Structure of Social Action (1937) Talcott Parsons criticized voluntaristic theories of action, such as rational choice theory, in which human behavior is characterized as making choices between means and ends in circumstances that present physical, environmental, and social constraints. In contrast, he set out to show how the choices people make and the actions that follow from those choices are oriented to social norms and values that create social systems.

The Limits of Rational Choice Theory

The success of rational choice theory as an explanation for why people make decisions depends, among other things, on the assumption that social benefits, such as happiness, social acceptance, prestige, and influence, have equal value for individual actors. However, such benefits may have different meanings for different social groups and they may symbolize different social values and ideas. Indeed, although we may make decisions about which symbols we wish to adopt to represent our self and social identities, rational choice theory does not really explain how certain objects, values, or gestures become endowed with the meanings we attach to them (Waters, 1994).

Even though there is acknowledgement that exchange relationships are shaped by and contribute to power relations and networks, nonetheless, rational choice theory tends to downplay the ways that people's choices may be constrained. That is, social circumstances, age, ethnicity, and gender may influence choice making. Moreover, rational choice theory overlooks the importance of social relationships in making decisions and choices about behavior and how the emotional components of decision-making may bear on people's calculations.

Methodologically, it is possible to claim that any action can be interpreted as rational given a set of beliefs and assumptions and it is difficult to refute rational choice theory because the action of the individual is both the object of explanation and the proof of the theory—they are both the topic under investigation and the mode of explanation. That raises a methodological challenge: How can we show that actions are rational without taking into account the contexts in which they are made and the belief systems that shape them? Also, stable relationships are necessary in order for rational choices to occur in a context of exchange. This takes us back to the question of norms and values, such as trust, and where they fit in rational choice theory. A central question concerns whether social exchange creates social order, or in fact, presupposes it.

Finally, the fundamental assumptions within rational choice theory—that decisions, behaviors and actions are purposive and instrumental—have been criticized (for instance see Wrong, 1997) for inherent psychological reductionism and its over-prioritization of self-awareness or consciousness. Rational choice theory is influenced by the development of Western thought and the way this has privileged individualism, with its contingent expectations of independence, self-sufficiency, and personal responsibility.

Terms & Concepts

Cost-Benefit: An economic term that, in rational choice theory, refers to a method of identifying the factors that are taken into account when individuals make choices. The term implies that objective value can be assigned to the costs of decisions or actions, in order to measure the benefits accrued.

Individualism: Used broadly in the social sciences to highlight the importance of individual action, interests, and belief.

Rational Action: Goal-oriented behavior directed toward accomplishing a calculated objective.

Rationality: A mode of action or decision-making that is technical in character. Max Weber distinguishes between formal rationality, which focuses on the technical criteria for action, and substantive rationality, which emphasizes the importance of values and ethics in action and decision-making.

Rationalization: A process of using knowledge to achieve control over life, associated with the development of modernity, replacing tradition and emotion with rational calculation.

Social Exchange Theory: Argues that human behavior and stable social norms are rooted in the social exchanges people make (money, time, goods) based on individual interests.

Social Interaction: Refers to the actions, gestures and sounds people make to communicate with others, the meanings these have for actors and the ways they are interpreted by others.

Social Order: The characteristics and processes of societies that appear to be stable and cohesive.

Bibliography

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Pratt, T. (2008). Rational choice theory, crime control policy, and criminological relevance. Criminology & Public Policy. 7 , 43-52.

O'Grady, W., Asbridge, M. & Abernathy, T. (2000). Illegal tobacco sales to youth: A view from rational choice theory. Canadian Journal of Criminology. 42 , 43-52. Retrieved May 2, 2008 from EBSCO online database, SocINDEX, http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=2682826&site=ehost-live

Melberg, H. O. (1993). Three arguments about rational choice theory in sociology. Retrieved April 21, 2008 from Geocities webpage http://www.geocities.com/hmelberg/papers/930520.htm

Minagawa, J. (2013). On the role of emotion in rational choice. Mind & Society, 12, 235-243. Retrieved October 30, 2013 from EBSCO Online Database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=91097035

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Zafirovski, M. (2013). Beneath rational choice: Elements of ‘irrational choice theory.’ Current Sociology, 61, 3-21. Retrieved October 30, 2013 from EBSCO Online Database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=84308178

Suggested Reading

England, P. (1989). A feminist critique of rational choice theory. The American Sociologist, 20 : 14-28. Retrieved May 2, 2008 from EBSCO online database, SocINDEX, http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=5333181&site=ehost-live

Hechter, M. & Kanazawa, S. (1997) Sociological rational choice theory. Annual Review of Sociology, 23 . 191-214. Retrieved May 2, 2008 from EBSCO online database, SocINDEX, http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=9712041601&site=ehost-live

Huber, J. (1997) Rational choice models in sociology. American Sociologist. 28 : 42- 53. Retrieved May 2, 2008 from EBSCO online database, Academic Search Premier http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=9710101414&site=ehost-live

van der Veer, P. (2012). Market and money: a critique of rational choice theory. Social Compass, 59, 183-192. Retrieved October 30, 2013 from EBSCO Online Database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=76403900

Zafirovski, M. (2013). What is the main significance of economic for sociological theory?. American Sociologist, 44, 177-197. Retrieved October 30, 2013 from EBSCO Online Database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=87798758